Dee and Eff are major shareholders in, and the directors of, the public company, Fan plc. For the year ended 30 April 2009 Fan plc’s financial statements showed a loss of $2,000 for the year.For the year ended 30 April 2010 Fan plc made a trading profit of $3,000 and, due to a revaluation, the value of its land and buildings increased by $5,000.As a consequence, Dee and Eff recommended, and the shareholders approved, the payment of $4,000 in dividends.Required:Advise Dee and Eff as to:

(a) the legality of the dividend payment; and (6 marks)